This Orissa based startup went from zero to Rs.120 crore in four years, and had RBI governor Raghuram Rajan drop in for a visitRajiv Singh | ETBrandEquity | June 22, 2016, 07:30 IST

It was the best selfie moment for Srikumar Misra, the founder of India’s first venture capital backed agri startup Milk Mantra.

Last month, the 39-year-old entrepreneur from Odisha had a ‘once-in-a-lifetime opportunity’ when he got a selfie clicked with unarguably the most powerful financial official in India: RBI governor Raghuram Rajan. On a scheduled visit to the state last month, Rajan evinced an interest to meet the startup founder. “It was an honour and extremely motivating for Milk Mantra,” says Misra.

While Rajan’s interest might have been to understand how ‘ethical sourcing of milk’ from over 40,000 farmers by Milk Mantra has resulted in financial inclusion of the community, what is equally interesting is startup’s scorching pace of growth.

From just Rs 18-crore revenue in its first year of operations in 2012 to Rs 122 crore last year, Milk Mantra— whose products include milk, buttermilk, curd and milkshakes under the Milky Moo brand, and functional ready-todrink healthy milk beverage MooShake—is on track to touch `200-crore next year, claims Misra. The startup is backed by VC firm Eight Roads Ventures and Aavishkaar Venture Management Services, India’s oldest social venture capital firm.

“We want to become a Rs 1,000-crore brand by 2020,” adds Misra, who rolled out the world’s first milkshake with curcumin last year in Bangalore and Hyderabad. Whats so special you ask? Curcumin, an extract from turmeric is believed to have multiple health benefits. Misra now plans to go pan-India. If the target appears too ambitious, there’s also a massive opportunity to be considered.

“We have just scratched the surface,” he says. While the market size of polypack milk in India was estimated to be over Rs 36,000 crore last year, and it’s growing at a CAGR of 16%, paneer (cottage cheese) too has been growing at 15% CAGR and was an over Rs 400-crore market in 2015. In fact, the market for flavoured milk and shakes too has been expanding at a fast clip: From Rs 500-crore in 2008 to an estimated Rs 2,500 crore last year: five times in seven years!

Marketing and brand analysts draw a parallel between the business strategy of Indian handset maker Micromax and the Odisha-based milk startup. Way back in 2008, when Micromax launched feature phones in India, it banked on an innovation to stand: a promise of 30-day battery life, which biggies such as Nokia and Samsung couldn’t offer at that time. It was an instant hit among masses seeking salvation from erratic power supply.Even urban India lapped up the idea of not charging the mobile every day.

Cut to 2012. Taking a cue from the largest Indian handset player, Milk Mantra too did something similar: an innovative packaging which increases the shelf life of milk up to four days and packaged paneer up to 21. Result: users found the proposition tempting.

“Milk Mantra has done a Micromax and more for sure,” says brand strategist Harish Bijoor. Milk is more mass than mobile handsets. In this market, keeping quality and extended shelf-life is a killer proposition, he adds.

In India, where the distribution chain is long and arduous, products need to survive. While durables suffer the least, even FMCG products such as biscuits and mixes tend to last long-enough. It is progressive perishables such as milk that suffer the most. Therefore, in terms of distribution, most milk-brands tend to get local and hyper-local even.“Milk Mantra seems to have cracked this, and this is a proposition that ticks,” reckons Bijoor.

While innovations in packaging got Milk Mantra strong word of the mouth advertising, what amplified reach was its unique below-the-line marketing: activations at parks, schools and tennis courts across the state, and sampling at temples such as Lingaraj Temple in Bhubaneswar.

“We have a challenger brand approach in spending by getting the maximum bang for our buck,” says Misra, who spends just 2% of revenues on marketing and advertising.

So far, so good. But can the startup take on biggies like Coke which has been aggressively pushing its flavoured milk brand Vio in India?Does it have the financial bandwidth and geographic reach to challenge well-established satraps when it comes to rolling out MooShake across the country?

Bijoor reckons that pan-India spread and “living through the distribution chain with product integrity intact will be the biggest challenge.”

Misra acknowledges the current challenges too: flawless execution, expanding infrastructure, developing a sourcing network, creating front-end sales and distribution. But he is optimistic. What is available is only flavoured milkshakes with a lot of sugar and no functionality, he claims, adding that his product is several notches better than the ones present in the market.

However, milkshakes have traditionally been a problematic category, losing out to the local dairy or restaurant. Even some of the world’s best MNCs have occasionally had to cry over shaken milk: for instance, the multiple launches and withdrawals by Nestle. If Misra’s model is not replicable on his march across the country, perhaps the more accurate analogy would be not Micromax, but Nokia that burnt briefly but brightly.